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Hilton is now in the legal seat over resort fees

History is quickly repeating itself over and over again when it comes to resort tax lawsuits.

Texas Attorney General Ken Paxton sued Hilton this week over resort fees and what he alleges is that the company “deceptively charges consumers higher rates than initially advertised” and that “the services allegedly funded by the fees are often free or included in the room rate at other non-resort resorts. »

The latest lawsuit came shortly after Paxton similarly sued Hyatt over its resort fee practices and settled with Marriott over similar allegations. Marriott now includes hotel taxes in the original quoted nightly room rate on its booking platform.

“Increased inflation and worsening economic conditions have made protecting Americans from predatory, illegal corporate practices an even more urgent priority,”[ads1]; Paxton said in a prepared statement.

“Many large hotel chains, including Hilton, have been deceiving their customers for far too long. I warned these companies that they would face consequences for this behavior, and Texas has delivered aggressive actions to protect consumers, promote price transparency in the hotel and travel industry, and ensure that companies that violate our laws are held accountable for misleading the public.”

The Texas AG goes on to allege that Hilton does not adequately reflect the surcharge on a nightly rate and charges guests additional fees twice: first as the fee itself and then again with taxes on the fee. It also comes amid growing political pressure for travel companies to be more transparent with extra charges.

Texas is accusing them

The lawsuit uses the Hilton Anatole in Dallas as a leading example of how the company uses trickle pricing with resort fees or similar fees that go under different names.

The hotel displayed a nightly rate of $193 earlier this month, but then added a “Daily Mandatory Fee” of $27.26 that includes Wi-Fi access, gym access, a savings discount, children’s breakfast and two bottles of water in the room . Remember: Those with silver status or higher in the Hilton Honors program already receive free water as part of their loyalty status.

Hilton Anatole also charged a “Texas Recovery Fee” of an unspecified amount, according to Paxton’s lawsuit. The “Daily Mandatory Fee” alone added more than 14% to the nightly room rate, which ended up being $258.46 after the fee and taxes were added.

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Had the 1,606-room hotel been sold out nightly for a year, the Texas AG lawsuit notes, the ownership group would have made more than $16 million from the surcharges.

The lawsuit also highlights the Woodlands Resort, a Curio Collection hotel outside of Houston, and the C. Baldwin, a Curio Collection hotel in Houston, as other examples of hotels in the state that charge additional fees under terms such as “Daily Resort Charge” and “Daily Mandatory Charge.”

The lawsuit also accuses Hampton Inn & Suites San Antonio Riverwalk, Hampton Inn & Suites Dallas Downtown and Homewood Suites by Hilton Dallas Downtown of charging fees twice, first as a fee and then again as a tax — a practice that had the potential to make each hotels more than $100,000 apiece annually.

“While decisions about mandatory fees are made by ownership and management at the property level, these fees are always fully disclosed when booking through Hilton channels, and we encourage all third-party distribution partners to disclose any fees when they advertise our inventory,” a spokesperson for Hilton. said in a statement to TPG. “We have long been committed to ensuring that all fees charged by hotels in our system are fully disclosed and continue to review this issue carefully to ensure there is consistency for consumers when they see our rates across booking channels.”

The hotel fees do not disappear

The much-maligned practice of charging resort fees is hardly going away, but it is highly likely that they will become more transparent.

Marriott never admitted fault in the settlement, and company executives have always maintained that the surcharges were noted throughout the booking process. You will see a blue box during the booking process showing the surcharge on Marriott’s reservation system. Hilton and Hyatt both list the extra fees they charge during the booking process, but that’s not enough in the eyes of the Texas attorney general.

Furthermore, the lawsuit goes on to note that Hilton charged the fee and labeled it as going toward facilities that were not even available or open during the pandemic.

“Hilton relies on consumers either not noticing or becoming too fatigued in the search process to cancel the transaction,” the lawsuit states. “Despite eventual disclosure of the charges, any disclosure does not cure the deception in the original advertised price.”

While Marriott’s new practice of bundling resort fees into the original price may seem like a likely industry practice, the company’s CEO earlier this month was not ready to speak for its competitors.

“It’s not as if they were somehow hidden. We’re clarifying and further improving that transparency,” he said on the company’s first-quarter earnings call. “I’ll leave it to the state [attorneys general] around the rest of the country for the rest of the industry. But I am pleased that we will lead the industry in terms of the transparency of our disclosure to our guests.”

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